Budget proposals 2014-2015: FPCCI suggests carry forward of unabsorbed tax credit

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed the concept of carry forward of unabsorbed tax credit for newly established industrial undertaking.
At present under Section 65 D of the Income Tax Ordinance, 2001, “If a company is set-up for manufacturing purpose during July 2011 to June 2016 it will be given 100 percent tax credit for five years.”
The sub-section (3) of the provision states that the tax credit shall be deducted from the tax payable in respect of the tax year in which the plant or machinery is purchased and installed, which means a one time tax credit only would be allowed.
The FPCCI observed that generally tax was not payable in the first few year of set-up of new industrial undertaking; therefore such benefit could not be availed.
Therefore, the apex trade body suggested the concept of carry forward of unabsorbed tax credit should be introduced, as it is available in section 65E (3) and (4) of the Ordinance.

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